DrumBeat: June 12, 2007
Posted by Leanan on June 12, 2007 - 8:04am
Topic: Miscellaneous
Come on in - the quicksand's fine: my part in the energy crisis
For example, if we wish to boost nuclear power in the teeth of dwindling liquid fuel supplies, we will discover that the "cost" of plant, mining, processing and other infrastructure will become uncomfortably high by present expectations. The more we try (and the more gasoline and diesel we burn in the process) the higher will go the "price" of the essential ingredients. It will be like chasing our own shadows. The same effect will plague the remnants of the oil industry itself.And once burned, the energy is gone forever.
We could call that the Quicksand Effect.
Energy efficient, but still using more
Many household appliances have become more efficient, using less electricity than ever to cool rooms, wash clothes and chill food. But the increasingly wired American home, where outlets are charging cell phones and iPods and powering multiple computers and big-screen TVs, is creating higher demand for power than was the case even a few years ago.
Ghana: Energy Crisis Devastates Mining Sector
THE PRESIDENT of the Ghana Chamber of Mines, Mr. Jurgen Eijgendaal has bemoaned the effect of the nation's energy crisis on the mining industry, describing it as very devastating.According to him, mining is an energy intensive economic activity and as such obtaining full energy requirements at competitive rates was vital for the containment of the sector's overall production costs.
Petroleos Venezuela May Explore in Vietnam, Argentina
Petroleos de Venezuela SA, the country's state oil company, plans to explore for oil and gas in Vietnam, Bolivia and Argentina.
OSHA steps up refinery oversight
Nearly 300 federal safety inspectors will fan out to refineries across the country over the next two years as part of a stepped-up enforcement program prompted by the BP Texas City blast and other deadly refinery accidents.
To some, high gas prices have a silver lining
A sprinkling of experts and consumers welcome paying extra at the pump.
Ethanol to Take 30 Percent of U.S. Corn Crop by 2012
Almost a third of the U.S. corn crop will be used in five years to produce fuel ethanol, possibly raising animal feed costs for farmers and meat prices for consumers, a new government report warned on Monday. Assuming U.S. ethanol production continues to expand to the Energy Department's projected 11.2 billion gallons by 2012, about 30 percent of the corn crop will be needed for the fuel supply, according to the Government Accountability Office.
Solar Panels, Biofuel and Tidal Turbines in Bloomberg Plans
Moving to harness cleaner forms of energy to meet the city’s growing power demands, Mayor Michael R. Bloomberg announced a plan yesterday to outfit municipal buildings with solar panels and to begin buying heating oil containing biofuels.
Builders create suburbs with downtown appeal
Victoria Gardens in Rancho Cucamonga, Calif., is typical of dozens of developments sprouting along the nation's light-rail lines and near subway stations: stores, theaters, restaurants, offices and housing connected by sidewalks to mimic a walkable urban neighborhood.Just one thing is missing: transit.
How Published Oil Reserves Figures Confuse The Oil Supply Situation
I occasionally read commentaries which imply that there is no concern about global oil supply because the world has huge global oil reserves. We know that because huge, and growing, reserves figures are published in World Oil and Oil and Gas Journal, which then make their way into the mainstream media.While those figures are published in respected oil industry journals, the figures are essentially worthless. No outside agency audits oil reserves for individual countries. Since there is no outside auditing, governments of many countries exaggerate their reserves figures. Also, multiple countries don’t update reserves figures for extended periods of time by subtracting off what they produce.
Nigerian government calls unions for talks over strike
The Nigerian government has invited unions to a meeting on Friday to discuss a threatened strike in Africa's top oil producer over rising prices and privatisations, authorities said on Tuesday.Unions have threatened to stage an indefinite general strike demanding President Umaru Yar'Adua reverse hikes in value-added tax and fuel prices introduced in the dying days of the previous government, which stepped down on May 29.
The EU's agrofuel folly: policy capture by corporate interests
Despite growing public concern about the risks associated to agrofuels, the European Union (EU) is throwing its weight behind the promotion of these often very harmful crops.
Battling Baghdad's petrol crisis
Filling up your car in Baghdad these days means organising a minor expedition, with the capital in the grip of a new fuel crisis.
Book review: The Last Oil Shock
There is something very strange about listening to the mainstream media, even on a solar radio, covering such weighty topics as the potential Collapse of Civilisation and hearing someone as confident and erudite as Strahan explain just how deeply dependent we are on supplies of fuels that will become increasingly unreliable over the next few years. It seems eerily at odds with 99% of the media content.
California lawmaker promises to revisit guzzler fee
A Silicon Valley state legislator vowed Monday to try again next year after the defeat of his provocative bill that would have given buyers of new Toyota Priuses and other fuel-efficient vehicles rebates of up to $2,500 - paid for by fees on buyers of new Hummers and other gas guzzlers.
Nuclear shutdown sparks energy fears
ONE of Scotland's ageing nuclear reactors had to be shut down manually over the weekend, the latest in a catalogue of problems which prompted experts last night to warn of a possible looming gap in energy supplies....Experts last night said the shutdown cast doubt on British Energy's plans to extend the lives of Hunterston B and the company's other nuclear station at Torness, in East Lothian.
I began researching this and found that the life expectancy of companies has been declining dramatically since the 1970s, when the first energy crisis occurred. Where earlier a company would be in existence for 50 to 60 years, now its lifecycle is down to just 10.5 years.
Guvs see money in saving planet
While many Americans see global warming and the country's dependence on oil as impending disasters, there are those who view finding solutions to these complex problems a colossal money-making opportunity.
Assembly Commission Approves PDVSA-China JV
Venezuela's national assembly energy and mining commission has approved the creation of Petrozumano, a joint venture between state oil company PDVSA and China National Petroleum Company (CNPC), according to a statement posted on the assembly's website.
Official warns of energy crisis
Construction of new electrical generation in the West is projected to grow by 6 percent, while demand for electricity is projected to increase by 19 percent over the next 10 years, according to the Federal Energy Regulatory Commission.FERC commissioner Suedeen Kelly, speaking on her own behalf, said the situation is nothing short of a crisis.
"There's not enough time to build our way out," Kelly told the Western Governors' Association here Monday.
Energy Scenario of Bangladesh Going from Bad to Worse.....
The helpless people of Bangladesh are gradually getting hopeless. People have started loosing confidence in the managerial efficiency of the caretaker government as far as improving the acute energy crisis is concerned. Caretaker Government (CTG) declared Jihad against energy mafias and promised various initiatives to manage the crisis and set the energy sector on the right track from the brink of collapse. People whole heartedly welcomed that. But after 4 months of CTG rule the energy supply situation showed only marginal improvement. Traders and businessmen spontaneously cooperated with government in adjusting business hours of shopping malls and markets in the cities when government requested them to pull down shutters in their otherwise peak business hours. Citizens in particular spontaneously cooperated with all other initiatives government suggested. But massive load shedding continues to make life miserable. Some people say it has turned worse.
Senate Energy Plan Debate Set to Begin
The U.S. Senate is set to tackle a comprehensive energy policy proposal this week as Democratic leaders aim to keep their campaign promise to reduce the country's dependence on foreign oil.
Our short-term energy policy very much requires the use of our own oil resources that can be easily extracted now.
Ghana: Scientist Blames Energy Crisis On Global Warming
AN ENVIRONMENTAL Scientist, Mr. Padmore Baffour Adjapong says global warming - an increase in temperature of the world - is the cause of Ghana's current energy crisis that is suffocating businesses in the country.He believes the increase in temperature has put much stress on water supplies to the Akosombo hydroelectric dam, from where the country generates the highest percentage of electricity for industrial and domestic usages.
U.N. seeks to conserve genetic resources
The United Nations is stepping up its campaign to conserve the world's genetic resources so crops and animals can adapt to global warming and other challenges, focusing on fish for the first time since fish are increasingly being bred to meet the world's food needs.
Carbon Traders Attracted to China’s Vast Methane Reserves
Carbon traders are utilizing the Kyoto Protocol's clause on 'certified emission reduction' credits to capitalize on China's vast coalbed methane reserves. The Asian director of Fortis' carbon trading desk calls China's methane 'easy pickings.' For every tonne of methane captured, about 20 tons of CO2 credits are obtained. CBM projects in China should indirectly benefit from foreign capital racing to exploit these credits before they expire in 2012.
WWF Awarded Grant to Study Negative Impacts of Damming Amazon Tributary
The Blue Moon Fund recently awarded WWF a grant to ensure that construction of the Madeira dams in the Amazon River basin does not permanently harm the region's biodiversity, economic potential and local communities. Established in 2002, the Blue Moon Fund supports nonprofit organizations working to build a sustainable balance between humans and nature.
Shell Begins Nigeria Ops Cost-Cutting Program to Offset Costs
Royal Dutch Shell (RDSB.LN) said Sunday it has started implementing a number of cost cuts to its operations in Nigeria, which are likely to include job cuts, to combat rising costs and falling oil revenues caused by production outages.
Crying Wolf or Crying Uncle: Does our dependence on foreign energy and credit really matter?
For a country founded on rugged individualism, our current state of affairs is looking a lot less rugged and a lot more dependent. With a massively expanding debt to foreign creditors, and an insatiable appetite for energy, we as a nation become more dependent each and every day. Even if we eventually import fewer Chinese products, the trade deficit may march higher because the percentage of energy (crude, natural gas, and refined products) from overseas sources continues to grow. More ominously, if we are in fact nearing the front door of Peak Oil, the price of energy will be headed in one direction, higher. This will only exacerbate our trade deficit.
Sinopec's Move
To Trim Gas Prices
Rekindles Debate
China Petroleum & Chemical Corp.'s decision to cut the cost of gasoline at some filling stations in Guangzhou city has reignited the debate about market pricing in China.
How to Trade Like a Rockefeller
Check out the Stockpickr portfolio and you'll see that the Rockefellers haven't left their oil roots behind. Rather, it's probably the most comprehensive oil-infused portfolio I've ever seen. The Rockefellers clearly believe in peak oil theory, and they are putting their money behind it full force.
The Supreme Court Doesn't Matter
California has been asking for permission to regulate greenhouse gas emissions since 2004, but the philistines at the Environmental Protection Agency (EPA) have yet to grant it permission to do so.For quite some time the EPA's excuse was that they didn't have the power to regulate emissions. That's funny--greenhouse gases harm the environment and the EPA is supposed to protect the environment. Maybe they should consider a name change.
Saudis increase focus on gas development
Karan is thought to contain at least 9 trillion cubic feet of gas and when development is completed in four years time the field is expected to produce one billion c/f a day of gas.The project is part of an ambitious gas exploration programme which is aimed to increase gas reserves by more than 20 per cent in the next five years.
My eerie thought was this: what if a time came in America when the conspicuous display of wealth was not such a healthy thing for the displayer? What if these displays only made them conspicuous targets for the hordes of economic losers that the Long Emergency will shake loose? What if wealth is actually forced into hiding instead of displaying itself for all to see?I admit it was not a big deep thought, just an eerie one. Of course, one would have to begin by asking what kind of society would worship clowns like Donald Trump in the first place — and the answer would be: a society of envious slobs deluded into thinking that they could become the next Trump if only the Baby Jeezus would whack them over the head with a sock-full of silver dollars. This is, after all, a culture currently fueled by two dangerously childish ideas: that it's possible to get something for nothing, and that when you wish upon a star your dreams come true.
World Bank plans international fund to fight deforestation
The World Bank is planning an international fund of at least 250 million dollars to fight deforestation, which contributes to global warming, a bank official said Monday.
BP: World's proven oil reserves edge lower
The world's proven oil reserves at the end of 2006 stood at 1.208 trillion barrels, fractionally lower than 1.209 trillion at the end of 2005, BP Plc said on Tuesday in its Statistical view of World Energy.The one billion-barrel reduction reflects in part a decline in Norway's reserves, which fell to 8.5 billion from 9.6 billion.
IEA raises estimate of world oil demand in 2007
Global oil demand will increase by two per cent this year, the International Energy Agency (IEA) said on Tuesday, revising upwards an earlier estimate by about 400,000 barrels per day and warning the market will be tight.
● Global oil product demand is revised up● May world supply fell by 565 kb/d to 84.9 mb/d
● Nigerian outages cut OPEC crude supply by 425 kb/d to 30.1 mb/d
● Dated Brent rose above $70/bbl in late May as markets tightened
● Global refinery crude throughput rose by 0.6 mb/d to 72.4 mb/d in April
● Total OECD industry inventories rose by 9.9 mb in April
Issues facing the oil and gas industry
Demand for oil is surging and unless significant investments are made and technology improves, the high demand growth will not be sustainable, according to a captain in the oil and gas industry.“Society is concerned over increased carbon dioxide emissions and other environmental consequences of energy development, and these concerns must be addressed,'' ConocoPhillips chairman and CEO James J. Mulva said.
Oil shortage could spark conflicts in world: SIPRI
The prospect of a future scarcity of oil and gas could lead to conflicts in Africa, the Middle East, Central Asia, South America and Southeast Asia, the Stockholm International Peace Research Institute (SIPRI) said on Monday.
'Paradox' as Mideast faces power shortage
Oil and gas-rich countries of the Middle East are facing a worrying paradox - how to meet rapidly expanding power demand to feed their fast growing economies, the International Energy Agency said on Tuesday."Shortages of natural gas - hitherto the fuel of choice for electricity generation - have become a regular feature, forcing governments to consider alternatives such as coal, fuel oil, nuclear and even imported gas," the IEA wrote.
Opec biofuel brinkmanship is a sign of things to come
It was always going to happen. Like a lover fearful they are about to get dumped for a younger rival, the Organisation of Petroleum Exporting Countries (Opec) appears to have its scissors poised and ready to cut up the rest of the world's suits unless it stops flirting with those wanton biofuels.
Nigeria hostage takers free 13 captives
Hostage takers in Nigeria's restive oil heartland released 13 captives Monday, including three Americans, officials said.The militants said earlier they were releasing the hostages on "humanitarian grounds," while indicating they would continue attacks despite conciliatory efforts from new President Umaru Yar'Adua.
As N.E. warms, tiny pests take root
One of the most sobering projections about global warming is that species -- including those that bring disease or harm -- will reach a climate "tipping point" that will allow them to survive in new locations. Now, researchers are racing to unlock exactly what temperature, humidity, and other climate thresholds could drive the spread of scores of species. The answers are critical, these researchers say, because even a tiny change in temperature could have an exponential effect on some populations.
UK’s richest man in slave labour row
Coalminers working in Mittal’s Kazakh mines claim his firm is endangering their lives by using dangerous, outdated equipment and by cutting corners. More than 90 have died in the mines since 2004.Miners claim that conditions are worse than in Soviet times and say they would rather work in Siberian mines.
Sole U.S. Company That Enriches Uranium Is Struggling to Stay in Business
Seventy years after the United States invented uranium enrichment, the sole American company in the business is struggling to survive, while nuclear power experts worry that its failure would leave the Russians dominant in the market for fuel processing.
ThaneEnergy Report: The Coal Peak, Historic Data (PDF)
There has been a lot of interest lately in the idea of non-renewable resources peaking. The basic idea is that natural resources do not suddenly run out, but instead experience a period of growth, a peak, and then a decline. Because resources do not suddenly run out but instead nearly always experience a decline curve, our usual idea of a resource “running out” is nearly meaningless. Resources experience two major periods: this first is pre-peak when they are cheap and abundant the second is post-peak when they are expensive and scarce. This is somewhat simplistic way of looking at a complex economic event, but it is much more accurate then the commonly thought of idea of “running out” and the associated metric of reserves over production to determine how many years a resource will last.Most peaking investigations to date have focused on oil and gas, but coal, as a nonrenewable resource, will also experience a peak and decline. Figure 1 shows the coal peak that has already occurred in the United Kingdom. The peak, as well as the year in which 50% of the original coal in place was depleted, are labeled. Many who study resource peaks, believe that the 50% depletion point coincides with the production peak and this is the fundamental way that peaks are usually predicted by analysts before they occur. The question that we can ask is whether coal production peaks coincide with the 50% depletion point and if they don’t why not.
The WSJ has an article on the front page that I found interesting:
This absurd situation cannot go on forever. Will the present rise in interest rates be enough to prick the bubble? Or will peak oil need to become evident to everyone first?
This "situation" will go on as long as the US is able to create money at will and as long as other countries are willing to fund our debt.
I think the rest of the world is afraid to stop this cycle because currently, the majority of the world economy runs on the USD. Pulling the rug out on the USD means the countries will get hurt as well as the US.
This is why you see Putin sending out grumblings to the contrary. He understands the situation and is testing the waters to see how much support he can drum up for breaking the cycle.
The US is providing 'free' debt through easy credit rather than free money. This cannot go on forever. Eventually the debt that has saturated the economy will become unsupportable and the 'house of cards' (IOUs in this case)will collapse under its own weight. IMO that point is not very far away.
Losses already incured, due for instance to the decline in the housing market or commodity trading losses in the derivatives market, are currently being disguised through shell games (ie moving losses around rather than declaring them). They are also being effectively veiled through reliance on credit-rating agencies which will not downgrade entities they rate, unless forced to do so by declared losses, for fear of losing business. The conflict of interest is evident. As was the case with Enron, companies may only be downgraded near the very end, creating a situation where everyone tries to make it through the exit at once when the downgrade finally comes. Needless to say, this is a crash scenario!
On-going coverage of the global credit bubble is provided in the Round-Ups at TOD:Canada.
Hello Stoneleigh,
Thxs much for your work on TOD:Can. With all the energy problems looming up north I am amazed that so few Canadians are not reading and commenting. I would have expected this branch of TOD to be thriving discussion site by now.
Perhaps you need to get a stronger grassroots penetration, but I am unsure how this could be accomplished. Have you tried handing out cards to strangers? Letters to editors of newspapers? Emails to Canadian leaders? Is denial a prevalent trait of Canadians even worse than here in the US?
I wish you the best of luck.
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
Finance markets are global.
US can raise their interests rates, but the huge Yen-Carry-Trade may still continue and provide plenty of liquidity for some time.
And Russia is also printing money like mad (45% y2y increase in M3 2005-2006).
I'm no economist and don't play one online, but several prominent finance and economy experts have said that there seems to be a growing risk of a systemic failure in the financial markets, including the central banks (hence including economy at large).
Then again, it could just be normal economist/finance analyst scare talk.
I don't think anybody knows for sure.
The whole derivatives market is so complex nobody even remotely claims to understand all of it. And many of the hedge funds are leveraged up to their ears through cheap loan money.
It's probably a shaky construction as it is, but it may take more than just US raising interest rates, to actually topple it.
At least, that's the impression I get from all the reading.
SamuM
I agree, i have also read a lot, and the whole global financial system seems to be on mudlegs. We have the biggest ever global credit/financiel asset boom in history. It can only end badly. The timing of the crash is very difficult, it can go on longer than you can stay solvent. And the longer time it takes the bigger the crash.
Then the whole monetary system can collapse, its an experiment since 1971, when Nixon closed the gold window, and the whole world embarked on a fiat money system, where the central banks can print/create money out of thin air at will. And they are doing it at double digit rates as we speak. No fiat money system has survived. This will surely also collapse in the not so distant future.
The only way to defend your savings, i believe is to buy PM:s(gold and silver).
Why don't you just buy heroin or cocaine? They'll retain their value and you can make slaves after the crash.
sarconal alert! Level red (high)
It is illegal to buy drugs.
Not in my neighborhood! Anyway, scarcity adds value. And, if you are wishing the total collapse of society on our heads, why do you have any scruples? If you want to stash gold and guns and shoot your neighbors, entertain Conan the Barbarian on Viagra fantasies, why not just enslave them with narcotics? Saves ammunition!
They'll be easy to barter, provide analgesics as the medical system is destroyed, and they're easily stored with little deterioration. the IRS doesn't track the cash-ought to be perfect for you doomer anarchists would-be warlords.
Insted of praying for the apocalypse, you will be preying on the apocalypse. So think it through, it will be much more practical than precious metals.
As the fossil-fuel supplied inventory runs out during and post-crash, there will be a huge demand for local tobacco, coca, cannabis, and alcohol, all of which have many other uses than human ingestion.
The huge demand, however, is both opportunity and risk.
If I had something of real value, why would I part with it for gold or silver? If people don't see it has having value, then it doesn't.
In a world that's falling apart, for arguments sake, then peoples values are likely to be all over the shop. Gold, silver or dollars require the participation of all parties in agreement of its value and generally accept it as a useful medium of exchange. Keeping in mind that history doesn't repeat,but mimes.
To my mind, the medium of exchange is defined by cultural acceptance, a rather fickle or even random process. Physical gold may be close to worthless and paper claiming to be gold definitely worthless.
Looking to the future, would I be happier sitting on a farm with acres of fertile land or a stack (at today's price) of gold?
When governments accept payment of taxes in gold, then it will have a value. Otherwise, it is just another exotic investment IMO. Better to turn a failing currency into something of real worth.
Too many people seem to believe that they can outwit economic crises, climate change and energy depletion by simply turning their notional net value into some other object of notional value like gold (with the click of a mouse) and come out the other side smelling of roses. I doubt it.
Perhaps playing at speculating with bits of paper and notional investments is coming to an end and only real physical investments are allowed in the game. If you're going to speculate with the future, then speculate, you're life may depend upon it.
Triumvirate of collapse - Economy, Ecosystem, Energy
I suppose while I'm at it, I should mention my outlandish view on property and property investment.
The intrinsic value of a property IMO is due to its vicinity to wealth creation. Originally this being close to the farms, ports and markets; then close to the Lords and other seats of power; during the industrial revolution close to the factories and during the services revolution simply close to everyone else. For the poor souls during the "30 years war" in Europe, it was being close to the mercenary armies, so tents were the thing to have.
Of course most property is now centred around the latter revolution, that of services; non productive activities in a Keynesian economy. Should services fail (or should that be simply the creation of money through credit), then the intrinsic value of properties dependant upon the service economy will also fail to hold any "intrinsic" value.
I would expect key industrial towns, ports, market towns and power centres to remain important. Although many of these centres may already have seen more development than will be required for the future.
Triumvirate of collapse - Economy, Ecosystem, Energy
I don't think anyone is suggesting that you sell everything and invest it all in gold + silver. However, a modest portion of your wealth invested in physical gold + silver (not paper), may be turn out to be very convenient. People would likely still need some medium of exchange if there were a financial collapse. Its not very convenient to sell off very small portions of land to buy food, supplies, a vehicle, whatever. People would not trust paper money after a collapse, but gold + silver would probably hold value and provide a medium of exchange. However, if things got so bad that there was a total collapse of civilization and chaos reigned, then I suppose even gold + silver might not be worth anything. At that point, even land might not be worth much if you had to contend with invading hordes. (They might not respect your property rights.)
IFeelFree...Gold, silver or prescious stones during times when the necessities of life are scarce will have value only to those that have plenty of the necessities and want to trade some of them for a more portable and longer lived store of wealth. When people are searching for their daily bread they will not be interested in trading their bread, if found, for gold. In a situation of a financial collapse I dont see much use for a store of gold until some order is restored from the resulting chaos of financial collapse. After order is restored, if it is, then gold will become very valuable. Below is a link to an article about the suspension of M3 monthly reports in March 2006 by the Federal Reserve. Note that the excuse the Fed used was 'we want to save money and the elimination of compiling M3 will accomplish that.' Pure bs. When did the current administration and Fed show so much restraint in spending money? The government clerks that compile M1 and M2 are still on the payroll so how much money did the Fed save?
http://inflationdata.com/inflation/Articles/M3_Money_supply.asp
I have linked below to an article and charts showing the increase of M3 in the form of more fiat dollar printing injected into our economy since 1959. The rise in M3 was moderate untill 1980 and then began a rapid increase. Since 2001 the rise has been breathtaking. The most bizarre feature of this upward spiral in M3 is that M1 figures remained almost flat, meaning that the 'new money' being created was electronic. Only one dollar in ten in the US is a real greenback, the other nine are electronic. Most of the real dollars are held overseas in foreign banks in the form of reserves. How difficult is it to erase an electronic dollar?
http://www.gold-eagle.com/editorials_05/tacinv112505.html
After looking at the charts and reading the accompanying article you can draw your own conclusions about why M3 reporting was dropped. Those in the US that hold a great deal of wealth are not going to hold it all in dollars when they see the money supply skyrocketing. They know that their wealth is being stolen by inflation, a hidden tax imposed by the Fed. The other 98% of us are going to live in interesting times. BTW, I am not affiliated with any financial institution, gold outlet, etc. I am a retired electrical engineer and not a trained economist but I do pay attention to what our government is doing, or not doing.
I have an interesting tid bit of information for those that want to live on a small farm and be self sufficient 'after the collapse.' During the middle ages in Europe when wars of every sort were continually sweeping the lands the farmers turned to growing potatos instead of cereal grains. The farmers found from bad experience that the armies and thieves would not take the trouble to dig the potatos and destroy them but they would set fire to a crop of cereal grain if they did not stop to harvest it and steal it outright. This allowed the peasant to escape to hiding while the danger was present and return to his plot of land to find potatos to survive on when the thugs had gone moved on. It is estimated that about 1/3 of the population of Europe died off during these wars, primarily by starvation and disease, and they did not have an oil based economy and were not confronted with climate change.
Just another day in paradise...
As I have said before, precious metals are not for the day after the collapse. They are for the day after the day after the collapse, if you follow my meaning. ;)
Ghawar Is Dying
The greatest shortcoming of the human race is our inability to understand the exponential function. - Dr. Albert Bartlett
Burgundy-
You depict a situation where the economy is so completely defunct that age-old stores of value (e.g., gold) lose their intrinsic value. That’s called anarchy. In that situation, it’s survival of the fittest. Given this week’s BlogAds Survey Results, this martial arts-studying, marathon-running guy in his 20s has a leg up on most TOD readers!!
But in all seriousness, you have to concede that certain stores of value will retain their worth better than others in a failing economy. Millennia of history show that precious metals do this better than others.
While you state that one cannot out-wit the economy, I think it’s important to remember that we (those of us embracing PO as a harsh, inevitable future) are the fringe – the 1/10 of 1% minority. Let’s be serious – the average American truly believes that in 50 years we’ll be zipping around in flying cars and vacationing on the moon. Those of us who take simple and logical steps to prepare themselves for what we believe will happen, simply put, will be better prepared. Is that an example of out-witting the economy? I’d say so.
Nobody is suggesting that investing in gold and precious metals is a panacea for post-PO wealth that will allow one to drive stretched Hummer limos and vacation in the Caribbean. That’d be as silly as suggesting gold will have the value of dirt!
I don't subscribe to the "mad max" scenario of collapse. What we face will not be a sudden collapse of everything or anarchy, but a slow or multiple stage collapse where people and institutions have some time to adapt, albeit, without the wherewithal to adapt successfully. Each failed attempt to adapt leading to the next stage of collapse.
The US occupation of Iraq may well be an example of an attempt to adapt to new global realities, but without the wherewithal to do it properly. Result, advancement to the next level or stage of collapse. Turning food into fuel may well be another.
I suspect the first phase of collapse will be economic in nature, secondly the ecosystem and finally energy. Except, of course, that each phase will not be discrete and all elements will be present during each phase to some degree and influence the outcome.
As for gold and silver, it is only an assumption that they will play their historic monetary role, it is not a foregone conclusion. As they say; "assumption is the mother of all f*@k ups". I suggest that it will be cultural preference rather than historic precedence that will define what we use to facilitate trade and transactions.
For example, I've been helping out some of the neighbours with their unruly gardens. In payment, as they insist on it, I simply ask for something towards the fuel costs. If money was no longer trustworthy, I would simply ask for the fuel instead.
I believe gold and silver will have a role to play, but likely much further up the chain than at a personal or even local level. It may form the basis for a currency, but not be legal tender in itself. It may also be confiscated by the State in its attempt to adapt to new economic realities.
Triumvirate of collapse - Economy, Ecosystem, Energy
You need to watch Mad Max again. That's exactly what happened. In the first movie Max is a highway patrol man and society is basically intact. There are lawyers, judges, policeman, towns, stores, even functioning rail.
Its not until the second movie do things really break down. Even then its only in the outback. There is still civilization on the coast, which is where they bring all the gas to.
The third one, is well, what everyone thinks of as the Mad Max scenario.
I agree. You hear about other areas that suffered economic collapse, like Argentina and Sarajevo, and precious metals were of limited use. In Argentina, gold did retain value, but only very small pieces. They didn't give you any more for big, expensive pieces than for cheap wedding rings. In Sarajevo, goods like shampoo, toilet paper, and cast iron cookware was more valuable than gold.
Gold might be better than cash if there's a dollar collapse, but I'm not sure it will hold its value better than material goods. The thing is, gold is not particularly scarce now. Just about everyone has a lot of gold jewelry, even people who don't care for jewelry, like me. (Gifts from friends and family.) You see even poor kids in the inner city wearing a ton of gold chains, pendants, earrings, etc. If everyone starts selling their gold and not many are buying jewelry, I'd expect prices to drop.
I'm no expert in precious metals, but as I recall the Argentina story, local merchants couldn't test whether high-carat (24 or 22) gold pieces had been cut with lesser value metals, so they treated all pieces as if they were the lower-carat (10,12,14) gold found in ordinary jewelry.
Donal, The jewelers of India are very efficient at testing the gold content of any piece of jewelry by using a touch-stone. I have seen this done in documentaries of India and found the technique fascinating. A jeweler uses a black touch-stone and rubs the piece of jewelry on the stone to get a 'color.' From the color is determined the purity of the gold. When I asked my local jeweler (upscale and in business at the same location for over 30 years) he stated that he had never heard of a touch-stone and that he had no easy way to determine the gold content of jewelry.
The older cultures found long ago that paper currencies are just paper and tend to wear their excess wealth in gold. A collapse in paper currency in older cultures would have less effect than in America.
I have seen this done...the gold is rubbed onto a stone (and I cannot remember what kind)to leave 'smear' of gold..a chemical I think a form of acid is dripped onto the smear in increasing concentrations, the point at which the gold is disolved by the increasing concentration of acid determines the purity...the higher the potency of the acid to remove the gold the higher the purity..
something along those lines anyway.
I have never said, that i believe, that the whole world falls apart. I am not a doomer.
I only, like not so few economists believe, that this Ponzi like worldwide credit/speculation bubble is unsustainable, and will at som point(helped by PO) bust.
I only suggest, that when you have what you need in shelter and so on, and still have some paper savings left, then it could pe prudent to shift theese (or part of it) to PM:s.
Or maybe a good stash would be aluminum foil. The energy inputs required to produce it are enormous, so it should eventually become as rare and expensive as PM, but a lot more useful.
If civilization collapses, there will be hoards of people mining landfills for metals/plastics/etc., and will be putting these materials into the market for decades. I doubt that they will find much gold and silver however.
Now toilet paper would be a good investment, since you won't find that in your nearby landfill.
I take it we are looking for sensible suggestions for long term barter savings.
I have thought about this a bit. It needs firstly a long life, then it must be hideable [survive burying or damp, still air etc].
Cheap chinese running shoes - start with your size
Tea lights [small candles]
Toilet paper [bulky, fire risk etc]
Hooch
Drugs may have a shelf life. I have always wanted to know which euthenasia drugs can be obtained and last forever without refrigeration [because I'm 40 years away from thinking about it]. Heroin seems a bit complicated to obtain outside afghanistan. Any easy painless suggestions? These would be very tradeable one day.
Many effective over the counter meds (such as aspirin) will keep ‘forever’ (dry, cool place) - the ‘shelf’ dates are made up so that ppl. throw them out.
Don't get tea lights, they're crap. You need a thin candle with a strong wick, so you get a good flame and little shadow from the lip.
For euthanasia, a good supply of whisky and a kindly soul with a mallet should do the trick. Or see the 'smother party' from the foreword of Burrough's Naked Lunch. If you want to use a chemical substance, there's plenty of herbs that will do the trick, but I don't know which are sedative as well as lethal. The opium poppy grows wild in the UK, anyway.
Also try cosmetics, soaps, lipstick. The Yanks used Nylons with my grandparents generation to good effect. Chicks love that stuff.
I think you're right... though aluminum is fairly easy to recycle and there should be some around for a good while. Still, at the dirt cheap price it's available now, it'd be a killer trade good. There are many other things which would fit this description as well.
However, it may be a bit problematic in terms of holding onto a fair amount of trade goods. Will the society of the future be so fair-minded that they'll grow food for you for the rest of your life so you can dole out aluminum foil and stuff they weren't bright enough to store away, or will someone with a bad attitude relieve you of it all?
That's one thing about gold, and to a lesser extent silver - you can hide it.
However, other things would be more cost-effective, and that brings up, to me, the concept of hiding your stuff like a squirrel hides nuts. You'd have to be a bit Machiavellian about it, since if it were known that you 'had stuff' you could be tortured for it. I'm not taking my dystopia overboard, there are many places even now where you could be tortured by folks if they thought they could get wealth thereby.
So... how does one stockpile trade goods and trade them safely? I suppose you could specialize in ammunition, but even that might attract the wrong kind of attention. In doing my own sneaky thinking on it, it might be an interesting niche to be known as an itinerant trader who facilitates trading between different communities. In such a position you could insert your own transactions into commerce without being obviously rich.
You still might end up tortured, but what the heck.
While this is not legally bankruptcy, it is logically the same thing just with a private arbitrator (the lender) rather than the court.
What is happening is that lenders are giving out bankruptcy conditions that are more favorable than the law so of course corporations will turn to those. In the past, lenders often offered to bail out troubled companies but the terms were worse than the law so the corporation took the public bankruptcy route.
Someone might do some legal digging to determine why the current law is viewed so differently than past law or why the terms of private lenders have changed so much. One (or both) of those must have changed to affect the situation so drastically.
Ghawar Is Dying
The greatest shortcoming of the human race is our inability to understand the exponential function. - Dr. Albert Bartlett
Buried in yesterday's DrumBeat, Todd asks:
let's say the economy contracts proportionally to the decline rate, i.e., -2% oil/energy = -2%GDP. (Per